Haitong International has released a research report reiterating an "Outperform" rating for Zai Lab (09688), with a corresponding target price of HK$35.25. The firm has adjusted its revenue forecasts for 2025-2027 to $470 million, $500 million, and $720 million, respectively. The company secures stable revenue by in-licensing and commercializing overseas products while also leveraging its cross-border platform to advance the global development of its innovative pipeline. Within its core pipeline, the DLL3-targeting ADC drug Zocilurtatug is planned to initiate three registrational clinical trials by the end of 2026, covering small cell lung cancer and neuroendocrine carcinoma. Furthermore, the company possesses several early-stage global assets with differentiation potential, such as ZL-1503 and ZL-6201, which collectively underpin its long-term value creation. Key views from Haitong International are as follows:
Zai Lab's 2025 performance outlook anticipates the company will achieve net product revenue of $470 million (year-over-year +16.5%). Core product VYVGART (FcRn) is expected to contribute $97.96 million in revenue (year-over-year +4.6%), with a gross margin of 61.0%. R&D expenses are projected at $200 million (year-over-year -12.8%), and SG&A expenses at $280 million (year-over-year -5.0%).
A dual-engine strategy drives both short-term performance and long-term global value creation. In recent investor meetings, management reaffirmed the company's core dual-engine strategy: 1) Introducing high-quality overseas products and achieving domestic commercialization provides a solid financial foundation for further investment in global innovation; 2) A highly integrated cross-border R&D platform enables faster and more efficient advancement of the company's high-quality pipeline for global market development. The report suggests that despite management's previous downward revision of the full-year 2025 revenue guidance and the postponement of the profitability target, it remains optimistic about the company's rich portfolio of commercialized products in the domestic market (8 approved products) and the multiple potentially differentiated global assets within its pipeline.
Zocilurtatug (DLL3 ADC) is expected to initiate three registrational clinical trials within the year. Zocilurtatug (Zoci) is the company's DLL3-targeting ADC. The company plans to initiate three registrational clinical studies by the end of 2026 and submit an application for accelerated approval in 2027: 1) For second/third-line small cell lung cancer (SCLC): Previous clinical data showed an ORR of 68.4% with a favorable safety profile, demonstrating a low incidence of Grade 3+ adverse events and no treatment-related discontinuations at the 1.6 mg/kg dose. The registrational Phase III study has now been initiated. 2) For first-line SCLC: An ongoing Phase I study combining it with a PD-L1 inhibitor ± chemotherapy; management expects data in the second half of 2026. Management anticipates initiating a Phase III study by year-end. Additionally, a Phase I study for a novel combination regimen is expected to begin in the first half of 2026. 3) For neuroendocrine carcinoma (NEC): A Phase I study is currently ongoing; management expects data in the first half of 2026 and plans to initiate a registrational study in the second half of 2026.
Multiple early-stage clinical products are poised to help the company achieve long-term global value. 1) ZL-1503: ZL-1503 targets both IL-13 and IL-31R, designed for long-acting/infrequent dosing, aiming for rapid itch relief and broad disease control, potentially becoming a novel dual-target therapy for atopic dermatitis. The company expects to report first-in-human data in healthy subjects in the second half of 2026. 2) ZL-6201 (LRRC15 ADC): By targeting cancer-associated fibroblasts to disrupt the tumor microenvironment, it holds potential for various solid tumors like sarcoma, breast cancer, and non-small cell lung cancer. Management anticipates initiating a global Phase I study in Q1 2026. 3) ZL-1222 (PD-1/IL-12): Demonstrated potent anti-tumor activity in preclinical models, including in PD-1 sensitive and resistant settings, with an improved systemic safety profile. Management expects to complete the clinical trial application within the year. 4) ZL-1311 (MUC17 TCE): MUC17 is a druggable antigen overexpressed in up to approximately 50% of gastric and gastroesophageal junction cancers. Management expects to enter global clinical development within the year.
Risk factors include new drug R&D risks; risks associated with new drug review and approval; commercialization underperformance risks; partner-related risks; technology iteration risks; and risks of continued losses.
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